Construction and civil engineering sites witness high-risk activities involving labour, heavy tools, and high-value construction materials. The very nature of construction and allied activities makes them vulnerable to accidents, negligence, theft, and burglary, among several other risks.
A contractor’s all risk insurance policy is designed to comprehensively cover such risks associated with construction and civil engineering works.
The policy, which covers projects of diverse sizes and scales, is essentially meant to insure project stakeholders such as the project owners and contractors against losses occurring during the project development phase.
A contractor’s all risk insurance policy is important for the insured parties for several reasons. Here are some primary benefits of this policy:
Protection Against Natural Calamities
Natural calamities like floods, storms, landslides, and earthquakes can cause severe financial and material losses to ongoing infrastructure projects. A contractor’s all risk insurance policy covers losses due to such events and serves as a reliable instrument for developers to cover losses due to such calamities and ensure project continuity.
Extensive Coverage
Construction and other infra-related projects often take several years to completion. Such long gestation periods multiply the risk factor for the contractors. The contractors all risk insurance policy provides an extensive coverage, right from the time of commencement to the final completion of the project. Such a wide coverage significantly mitigates the impact of losses due to site accidents.
Covers Third-Party Liability
Infrastructure development activities involve multiple outside parties who regularly visit and work on the site, such as inspection officials, consultants, and labourers. A contractor’s all risk insurance policy covers the insured against legal liabilities related to fatal and non-fatal loss or injury to third parties due to any accidents on the site.
Handling Risks
With several workers and complex tools involved in the project, there are always chances of negligence and handling risks. Risks may involve vehicle collisions, objects falling from dangerous heights, and spillage, to mention a few. A contractor’s all risk policy covers all such handling risks.
Includes Testing Phase
The policy also covers losses arising due to any construction failure or non-operation of any electrical or safety systems during the testing phase of the project.
To Conclude
Contractor’s all risk insurance policy is an instrument meant to help infrastructure developers and contractors protect their stakeholders and mitigate their financial losses in the event of a mishap on the project site. It is an effective tool to maintain project continuity, and the insured entities can also include suitable add-ons depending on their specific requirements. While the policy covers several risks, make sure that you read all the inclusions and exclusions before purchasing the policy.